Inside a laboratory on Old Webster Road, Steven Maynard, a senior laser applications engineer, put on his safety glasses, pushed a button and demonstrated the strength of a powerful fiber laser.

Sparks flew as the beam, in rapid-fire motion, drilled holes into a steel cylinder, a replica of a component for airplane engines.

The laser came from a robotic arm connected to a large gray box.

“That,” said Mr. Maynard, pointing to the box, “is quantum physics.”

What happens in that box — and what shoots out of that robotic arm — have made IPG Photonics Corp. the world leader in fiber lasers, and one of Massachusetts' fastest-growing companies. It's poised to grow bigger still.

IPG first came to Oxford after acquiring a division of Galileo Corp. in Sturbridge in 1999. As town officials noted at the time, that was the start of a new era of economic development for Oxford.

IPG sells to companies around the world that use lasers for cutting, welding and marking materials. As more customers have embraced IPG's products, the company has expanded. Now, aided by state and local tax breaks, the company is spending $18.1 million to build a 133,000-square-foot manufacturing facility at its Oxford headquarters.

IPG scouted sites in other communities before deciding to stay in Oxford. It stayed for the same reasons it came here in the first place: The educated workforce and lower costs.

The new building, scheduled to open in the summer, will be able to accommodate another 200 workers. IPG already has 700 employees in Oxford, 100 of whom were new hires this year. It has 2,300 workers worldwide.

Sales in the first nine months of 2012 were $417.5 million, up 19 percent from the same three quarters last year. Profit rose to $112.8 million from $89.2 million.

The company's rapid growth reflects growing acceptance of fiber laser technology. IPG's technology was developed in Russia, where the company was founded in 1990. Even in its early days, IPG's founders were convinced their technology was superior to other laser technologies. But they couldn't compete on price. That changed a couple years ago.

“The real growth of the company took off in 2010,” said Timothy P.V. Mammen, vice president and chief financial officer. “That's the year in which the price of fiber technology came down enough to be equal, for example, to a (traditional gas) laser. The cost of the fiber laser prior to that, when you bought it, it was more expensive.”

IPG accounts for a dominant 75 percent of all fiber laser sales, according to a report from Mountain View, Calif.-based Strategies Unlimited.

“Some of it is the technology itself, and some is the market power they've gained through volume,” said Tom Hausken, author of the report.

Fiber lasers represent just a fraction of the overall laser market, which BCC Research LLC of Wellesley measured at $7.9 billion last year. Mr. Mammen estimated fiber lasers comprise 15 percent of the market. That share is expected to double in four or five years, he said, and IPG's revenues are on track to double with it.

Lasers convert energy into intense beams of light. At different wavelengths, lasers are used in myriad applications, from playing CDs to performing eye surgery. IPG makes industrial lasers for manufacturers that need to weld, cut or mark metals. Its customers include heavyweights like General Electric Co. and The Boeing Co. IPG lasers are used to craft a number of consumer goods, including cellphones and cars. They can also be powerful enough to be used in defense, to shoot down moving objects.

While industrial lasers typically involve crystals or carbon dioxide gas, IPG uses semiconductor diode pumps and hair-thin optical fibers. The result is a laser that is precise and efficient.

“Fiber lasers convert input energy into a high-quality laser beam much more efficiently than other lasers,” said Jeff Hecht of Newton, who has written books and articles about lasers. “That means they don't require elaborate cooling systems to generate high power.”

IPG started commercializing its technology in 2004 and went public two years later.

Other laser makers have begun making fiber lasers — “They're all trying to copy us,” Mr. Mammen said — but they can't replicate IPG's products because the company develops all of its core technologies and components in-house. Vertical integration allows IPG to keep its recipe for success secret.

“We're self-sufficient, practically,” Chief Executive Officer Valentin P. Gapontsev explained in a company video. “We produce our products starting from raw materials. Our serious advantage versus our major competitors is that we have created all our technology organically, without any adoptions, acquisitions or mergers.”

One challenge for IPG is that many potential customers are accustomed to the lasers they've been using, and are resistant to change.

The company, whose share price rose above $65 last week, has been a favorite success story for public officials.

Oxford gave IPG a $431,000 discount on property taxes for its promise to grow locally, while the state awarded $1.7 million in tax credits. State officials also threw $2.2 million into a sewer project to accommodate IPG and other local businesses.

Mr. Mammen said the company has more than held up its end of the bargain, adding many more jobs over the years than promised. And while the latest addition to IPG's Oxford campus is being supported with tax breaks, the company has done several smaller expansion projects without subsidies. The campus has quadrupled in size since 2000.

The newest building is expected to serve the company for three to five years. By that time, IPG could be twice the company it is now.

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